Correlation Between China Merchants and Bank Hapoalim

Can any of the company-specific risk be diversified away by investing in both China Merchants and Bank Hapoalim at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Merchants and Bank Hapoalim into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Merchants Bank and Bank Hapoalim ADR, you can compare the effects of market volatilities on China Merchants and Bank Hapoalim and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Merchants with a short position of Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Bank Hapoalim.

Diversification Opportunities for China Merchants and Bank Hapoalim

0.0

Correlation Coefficient

China Merchants  Bank Hapoalim

Pay attention - limited upside

The 3 months correlation between China and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Bank Hapoalim ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim ADR and China Merchants is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Merchants Bank are associated (or correlated) with Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim ADR has no effect on the direction of China Merchants i.e., China Merchants and Bank Hapoalim go up and down completely randomly.

Pair Corralation between China Merchants and Bank Hapoalim

If you would invest  401.00  in China Merchants Bank on February 29, 2024 and sell it today you would earn a total of  64.00  from holding China Merchants Bank or generate 15.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

China Merchants Bank  vs.  Bank Hapoalim ADR

China Merchants Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, China Merchants reported solid returns over the last few months and may actually be approaching a breakup point.

Bank Hapoalim ADR

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Bank Hapoalim ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bank Hapoalim is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Merchants and Bank Hapoalim

The main advantage of trading using opposite China Merchants and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Bank Hapoalim can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bank Hapoalim will offset losses from the drop in Bank Hapoalim's long position.

The idea behind China Merchants Bank and Bank Hapoalim ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.